Psst. I have a confession to make. Don’t tell my cable company, but I’m preparing to make “the call” to become another cable cutter. Joining over 3 million traditional TV subscribers that defected in 2017.
I’ve been a customer of one of the major providers for many years, perhaps a couple of decades. Our family got the basic cable package and we’ve stuck with that over the years, usually in a bundle with Internet service and, more recently, a phone.
Our overall experience has gotten better, especially in the past few years. Faster Internet, better reliability, easier service calls, no-hassle set-top box replacement. Even support calls have been generally pleasant and helpful.
I like to watch a mix of cable news (don’t judge me, I’m trying to break that habit), HBO, sports, and a few other shows that come and go… like Justified or Fargo. So, I’m not unhappy about the programming, except that I only watch a small selection of the available channels in a so-called “basic” package.
So if someone asked me to rate my satisfaction to all the things I’ve mentioned, I’d say at least “good.”
Then why am I actively looking to get rid of the subscription TV part of my bundle? I’m currently testing several Over The Top (OTT) providers like Hulu, Sling TV, and HBO Now, to try to find a lower-cost way to get the programming I want. I’m even going old school with free regular TV via an HD antenna.
CX Improvements Haven’t Increased Satisfaction
The modern “cable” industry is really a combination of Internet Service Providers (ISPs) and subscription TV. For as long as I can remember, satisfaction has been poor, and doesn’t seem to be getting better despite industry efforts. (If you don’t believe me, read a few articles and then continue below.)
The ASCI has been tracking subscription TV satisfaction since 2001, when it started with an index score of 64. Here we are 17 years later, and it has risen to … wait for it … 64!
Only Fios (Verizon) and U-verse (AT&T) cracked 70. To put this in perspective, the best of the cable industry would be the worst in nearly all of industries that the ASCI tracks.
Now, it’s important to note that the ACSI doesn’t just use one simple question like “how satisfied are you?” Rather, it assesses a number of factors that aggregate into a score that Managing Director David VanAmburg says measures “value for money” — how the consumer feels about what they get in return for the price paid.
The “what you get” includes programming, service calls, quality, etc. And the price is the bill… which has been going up and up in recent years. VanAmburg says that while the consumer experience has improved, price increases continue to foster the impression that cable costs too much for the value received, so satisfaction rates remain low.
That’s supported by TiVo’s “Online Video and Pay-TV Trends Report for Q4 2017,” which found high/increasing prices a factor in 87% of cord-cutters, and 83% of dissatisfied subscribers.
Innovation to the Rescue?
UpRamp is a startup accelerator launched a couple of years ago by CableLabs, which has helped build many of the foundational technologies we take for granted. Like DOCSIS, a telecommunications standard used to provide Internet access via a cable modem.
According to Scott Brown, UpRamp’s Executive Director, the cable industry is “looking at long-term innovation” to improve the customer experience. According to this article, UpRamp starts with the problems that member CTOs want to solve, then narrows them down with review from advisory panels, experts, and cable executives to settle on six that show the most promise in solving immediate problems.
It’s completely reasonable that CableLabs/UpRamp will want to service its customers — the member cable companies. But I have to wonder — are they solving the problems that end consumers like me want solved? What is the process that the cable CTOs use to get customer input? I’m skeptical that they have this quote up on their boardroom walls:
“You’ve got to start with the customer experience and work backwards to the technology. You can’t start with the technology and try to figure out where you’re going to sell it.”
— Steve Jobs
To be fair, you can see evidence of innovation in the cable experience, including shorter install windows, using AI in customer service, chatbots, improved customer communication and more. DeviceBits, an AI-powered customer support platform, is one example of a company that’s gone through UpRamp’s process and is now “tracking six new opportunities with operators across the globe.”
Despite these improvements, Brown agrees that “too expensive is a common problem.” In fact, it seems like the core problem. Why?
According to Brown, the cable industry we know and don’t love today is a result of 50 years of evolution that started with geographically separated providers with a lock on their turf. Brown says that “carriage” agreements — which cover the content cable companies can transmit — are also a factor. If Comcast, say, wants to offer a popular service like ESPN, it has to negotiate a deal with Disney (the owner) that includes a bunch of not-so-popular channels and other restrictive terms.
So the consumer that only wants ESPN has no choice but to accept a package that includes more. This is not a knock on ESPN per se — every company wants to create a great product and exert pricing power. But these agreements are starting to break down as consumers say “no mas” to what they perceive as high prices. As usually, an entrenched industry is not changed from the inside, but from disruptors like NetFlix, Amazon, and now a host of OTT providers.
In a sign of “if you can’t beat ’em, join ’em” some cable operators are launching their own OTT services (e.g. Dish/Sling TV). Others are testing new “skinny” bundles. These are all positive signs that consumer voices are finally being heard.
Cut the Price?
The simple fix would be to cut prices. That is the core reason for customer dissatisfaction: not enough value for the size of the bill.
Personally, I think the cable industry — including the media companies that supply the programming — could have forestalled much of the current cable cutting by being more customer-centric regarding pricing and bundles. But no, when there’s money to be made, short-term thinking rules. Especially when customer choice is limited.
But let’s get real. If you were running one of these cable companies, would you have dared to cut prices to all your customers (assuming media companies wanted to play along), just to stem the defection of price shoppers? I think probably not unless you are Jeff Bezos with a board and investors willing to play the long game.
In my view, a more reasonable strategy would have been to maintain pricing and deliver more within that envelope. Improve the perceived value. Unfortunately, raising prices has poured salt in an open wound.
As Brown points out, cable operators have a valuable relationship with households. They could (and some are), supply other solutions like home security and even mobile communications. But I fear it’s a case of too little, too late. The core price/value issue will not be addressed by the legacy cable players, but rather the upstarts with nothing to lose.
What’s Your Solution?
I’ve questioned whether the cable/media industries really had their customer’s concerns at heart. What do you think they should do?
Please give your advice in the comments below. Who knows, maybe some cable executive will actually read them and take action!
Bob –
One of my sales mentors used to advise a simple rule: “Make sure you’re giving customers more in perceived use value than the perception they have of cost involved.” Cable/ISP companies (and telecoms too, if I’m being honest) have never done that. As you and others, I’ve had my own interpretations of how they are endeavoring to justify ever-increasing charges: http://customerthink.com/comcasts-nps-gamble-can-the-metric-help-fix-the-customer-experience-culture/. By any of the most frequent measures of consumer value – ASCI, NPS, Temkin, etc. – this industry has, like inert sediment, managed to remain at the bottom of the industry CX performance barrel for decades.
Prescriptives? Well, per your point, the unlikely possibility of maintaining prices and providing more REAL value would be a start. Given that this strategy is a long-shot in the obsession for profits (the industry is not known for conscious capitalism), a more useful and visible approach would be to set up active online customer communities and advisory panels to help define and build value initiatives. Inviting customers to the party and communicating this to the base (and employees) would also go a long way to enhancing the industry’s, and individual providers’, very well-deserved crummy reputation and image.
Bob, of course companies that provide utilities do not have their customers at heart. The problem is that there was not enough competition until it was and then it got swallowed, so the status quo got re-established (admittedly an abbreviated and slightly cynic description). The result is that their reputation is in shambles, pretty much around the globe.
This means that delivering more value and, importantly, also being perceived as delivering more value for the dollar is a very long process. Most of us stick to bad opinions.
My recommendation is to look at once iconic companies that were floundering and then made a restart by involving customers in their product development. As per the well known Edelman Trust Barometer these involved customers need to be ‘people like I’ – people I trust. As these people are not celebrities this will not really speed up the process but add the credibility that cable companies – and others – do need.
Of course, I assume that they really want to do this change instead of relying on captive audiences and waiting to become the next Blockbuster …
Hi Bob: I don’t anticipate that consumers will receive better value or more affordable media channels until vendors are forced to provide it by either 1) losing regulatory protection for their business models, or 2) competitors chip enough subscribers away with niche offerings, as they have already started to do. Consider the same phenomenon happening in the auto industry. Auto dealerships enjoy regulatory protection in almost every state through laws that restrict manufacturers selling direct to consumers. What is an auto dealer’s incentive to innovate/increase value delivered/improve CX? None, really, because the largest threats to their business model are consistently and completely thwarted.
I think the quote you cited from Steve Jobs makes complete sense when the company is operating in a rabidly competitive market. In the context of government-protected media companies and other utilities, ‘give the customer what he/she wants’ appears the wrong strategy to executives because it ratchets down profits. It doesn’t have to be that way. In this instance, government protection of business interests defeats consumer interests.
Thanks for your comments. It seems the answer to my question is simply this: cable will be fixed with more competition. The proliferation of high-speed internet (ironically courtesy of the cable operators!) has opened up the market for Netflix and many more OTTs.
Michael, you wrote your article nearly 3 years ago. Comcast made huge investments to improve customer service. That may have contributed to an ASCI improvement from 54 in 2015 to 62 in 2016. By 2017, dropped back to 58.
Graham Hill’s comment on your 2015 post summarized the situation well:
“I wonder whether Comcast really need to bother with improving their customer service. Due to the geography and demographics of the USA, many customers do not really have a practical alternative to Comcast. If they want cable and all that comes bundled with it today, they, in effect, have to take Comcast. Why go through all the bother of improving customer service if you have a largely captive audience? Of course, it makes for great headlines, particularly when you are the perennial customer service laggard. But how much are headlines worth to the bottom-line?”
What I suspect will happen is that the cable/infrastructure solutions providers will raise their Internet-only prices, because they still have a semi-monopoly. There’s not much money in the programming anyway — most of the cost problems are due to the media companies pricing/packaging models.
What the future may hold for us all is more expensive Internet and cheap(er) programming. Leaving our bills much the same!
I’m still on safe ground re my observations of a few years ago. The industry as a whole has low CX ratings . Comcast’s investment in cultural focus and customer service seems to have made very little difference. ACSI is pretty static, and both Temkin and NPS ratings are among the lowest recorded. For example, Temkin’s Maarch, 2018 CX rankings report shows Charter ranked at 310, Cox at 312, and Comcast at 314 out of 318 companies rated. Comcast’s 2018 score is -3, compared to +5 for Charter and -9 for Cox. Graham’s comment is on point – – but, like you, customers are increasingly taking advantage of more value-focused alternatives. Or, through inertia and habit, they may just stay put – – something the cable/ISP companies count on.
ACSI just released the 2018 telecom industry scores for streaming services and subscription TV
http://theacsi.org/news-and-resources/press-releases/press-2018/press-release-telecommunications-2018
Streaming services includes Amazon Prime Video, Google Play, Hulu, Vudu, Sling TV, DIRECTV NOW, Showtime Anytime, and Sony Crackle.
Wait, what? I’ve never heard of Sony Crackle, but at 68 it trailed all the other streaming services which scored in the range of 70-75.
But subscription TV could only hope to be as good as Sony Crackle. Because the industry average was 62 — worse than last year.
David VanAmburg, Managing Director at the ACSI summed up this way:
“Streaming services don’t have the hidden fees and six-month rates that subscription TV does, not to mention they’re cheaper and simpler. But because consumers don’t have many options when choosing a subscription TV provider, those businesses don’t see a lot of risk in customer dissatisfaction, and we’re unlikely to see dramatic changes any time soon.”
Comcast was one of the worst, declining 2 points from last year to 57. Wow. And after all those investments Michael mentioned.
All the “cable TV” operators have the same problems to deal with, and yet there is a stunning gap of 13 points from Comcast (57) to AT&T’s U-verse (70). What is AT&T doing differently?
Comcast believes in NPS and eNPS as the pathway to improved CX and EX performance. They even have an executive with NPS operations in his title. Perception is reality, and Comcast’s poor perception speaks for itself. Whether it’s ACSI, Temkin, or NPS scoring, the return on Comcast’s programmatic and staffing investments must really be questioned. To your point, and mine, WOW indeed!!
I asked David VanAmburg why the huge gap between Comcast and the leaders.
He said “both fiber optic (U-Verse/Fios) and satellite (DirecTV/DISH) typically deliver higher quality in terms of reliability than the older coaxial cable technology. Fiber and satellite companies have historically scored above all the cable companies by a significant margin.”
Interesting. The quality of the product (in this case reliability) is also important.
So, Comcast tries to improve customer experience by focusing on customer service. When a better product and lower price is what consumers seem to really want. Maybe the problem is that Comcast, like its competitors, has no easy fix for pricing, but is also hamstrung by the technology (cable) underpinning its service. Also not easy (impossible?) to change. What’s left? Customer service. And we can see that isn’t enough to raise scores.
That said, maybe satisfaction scores aren’t all that important, as Graham pointed out years ago. Comcast is doing well financially, according to 2017 full year highlights:
* Consolidated Revenue Increased 5.1%; Net Income Attributable to Comcast Increased 161%; Adjusted EBITDA Increased 6.2%
* Net Cash Provided by Operating Activities was $21.4 Billion; Free Cash Flow was $9.6 Billion
* Earnings per Share Increased 167% to $4.75; On an Adjusted Basis, Earnings per Share Increased 18.4% to $2.06
* Cable Communications Revenue Increased 4.9%; Adjusted EBITDA Increased 5.3%
* Customer Relationships Increased by 770,000; Over 1 Million High-Speed Internet Customer Net Additions for the 12th Consecutive Year